disability-insurance-customer-cultivation-strategiesAs insurance sales professionals, we spend a significant percentage of our time on lead generation. However, have you ever stopped to wonder what might happen if we dedicated an equal amount of time to customer cultivation?

Customer cultivation is the art of moving beyond responsive customer service. It’s proactively helping clients satisfy needs they don’t even know they have. We frequently encounter customer cultivation in the hospitality industry. At the most basic level, you don’t have to ask a skilled server to refill your drink because it’s already taken care of. With an accomplished server, you almost always indulge a little more than planned because the experience is so delightful.

There’s no doubt that it’s a little more challenging to make the insurance experience delightful, but it’s certainly not impossible and it’s definitely worth the effort. Consider these statistics:

  • The probability of selling to an existing customer is 60 to 70 percent. The probability of selling to a new prospect is 5 to 20 percent. (Marketing Metrics)
  • A 2 percent increase in customer retention has the same effect as decreasing costs by 10 percent. (Leading on the Edge of Chaos, Emmet Murphy & Mark Murphy)
  • It costs 6 to 7 times more to acquire a new customer than retain an existing one. (Bain & Company)

While we’re busy prospecting for new clients, let us not forget that our existing clients are our most valuable assets and quite possibly the best and easiest source for new business. With this thought in mind, below are three customer cultivation strategies to help you proactively anticipate your clients’ needs. 

Strategy #1 – Maximize protection levels. As clients’ incomes go up, so do their income protection needs. With this in mind, teach clients to increase their protection levels every year. The easiest way is by leveraging the future purchase option rider, which allows an annual benefit increase each year without a medical exam. 

In addition, you should personally check in with clients regularly. Schedule a few follow-ups every month using a systematic approach. If a client’s income or cost of living has increased, an updated disability insurance plan may be needed to provide adequate primary or supplementary paycheck protection. Make sure clients understand that employer-sponsored benefits are taxable and sometimes capped, so they may be insufficient on a stand-alone basis. In addition, it’s much easier to purchase individual disability insurance policies with youth and good health, so encourage clients to secure their own individual disability insurance policies now – before they encounter illnesses or injuries.

Strategy #2 – Fill coverage gaps. Many clients may have overlooked potentially costly coverage gaps. They’ll appreciate you alerting them to key coverage opportunities before disaster strikes. Below are a few examples:

  • Health insurance deductibles and co-pays: With health reform underway, many health insurance policies now have higher deductibles, co-pays and out-of-pocket maximums. Ask your clients how they would manage these costs in the event of a critical illness diagnosis such as cancer. If appropriate, suggest critical illness insurance to fill the gap.
  • Disability insurance elimination periods: Most disability insurance policies have elimination periods of 60 to 120 days before benefits become effective. Ask clients if they are prepared to cover living expenses during the elimination period. If not, suggest critical illness insurance to fill the gap.
  • Spouses: When one spouse if the primary breadwinner, the other spouse is often left uninsured. However, this can be a huge disadvantage if the stay-at-home spouse is diagnosed with a critical illness and unable to manage household demands. Always recommend a critical illness insurance policy for the stay-at-home spouse to help cover the cost of childcare, in-home care, and other unexpected expenses.
  • Long-term care: If your clients care enough to protect their paychecks during their working years, they will also understand the need to protect their financial assets during their retirement years. Those who are interested in long-term care insurance will receive the best rates while they are still young and healthy so recommend this protection to clients in their 50s.

Goal #3: Keep clients engaged. When prospects become clients, handle them with the care and appreciation they deserve. They have as much potential to help your income as a winning lottery ticket. Keep them close and shelter them well. Don’t let a month pass without contact. Express appreciation at every opportunity. If you treat clients with extraordinary care, you won’t have to ask for referrals – your clients will naturally look for every opportunity to promote your services to their friends. 

While filling the sales funnel is always important, nurturing existing clients is paramount. If you make customer cultivation a high priority, you’ll reduce churn, maximize customer lifetime value, improve client satisfaction levels and enjoy more referrals.

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Note: The article above was originally featured in the January 2013 issue of Health Insurance Underwriter Magazine.

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